Senator Sends Letter to SEC Requesting Action Regarding Current Initial Margin Regime for CDS Portfolios

U.S. Senator Mike Crapo (R-ID) of the Senate Finance Committee submitted a letter to SEC Chair Mary Jo White urging the SEC Division of Trading and Markets staff to "act promptly" with respect to the initial margin regime currently in place for cleared Credit Default Swaps ("CDS") portfolios.

According to the letter, when the SEC approved an initial margin regime for broker-dealers to permit the portfolio margining of swaps under CFTC jurisdiction and securities-based swaps under SEC jurisdiction by broker-dealers two years ago, it did not address requirements for other market participants. Senator Crapo stated that the SEC has issued a series of temporary conditional orders to non-broker-dealer market participants to permit the portfolio margining of swaps and securities-based swaps; however, those temporary conditional orders are set to expire on January 31, 2014.

Because of this, Senator Crapo urged the SEC to fix the "disparity of treatment" between broker-dealers and non-broker-dealer market participants. He requested that the SEC staff extend the interim regime for non-broker-dealers for a period of at least 90 days, during which time the SEC should make permanent the initial margin regime for CDS portfolios and facilitate portfolio margining for all market participants.

See: Letter from Senator Crapo to the SEC.
Related news: Buy-Side Trade Associations Submit Follow-up Letter to SEC on CDS Portfolio Margin (December 30, 2013); Buy-Side Trade Associations Submit Joint Letter to SEC on CDS Customer Portfolio Margining (September 20, 2013); MFA: Update on SEC Interim Relief for CDS Customer Portfolio Margining (June 3, 2013) MFA: Update on SEC Interim Relief for CDS Customer Portfolio Margining (May 13, 2013).